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Cash is King

The number of buyers purchasing a property with cash is on the up. If you wanted confirmation, you only have to look to the Council of Mortgage Lenders (CML), which calculates that last year there were some 370,000 cash sales, 25% higher than in 2009. Over the last few years, the number of cash buyers has been on the rise. During the depths of the economic downturn, when mortgage finance was difficult to get hold of, cash was the best – if not the only option – open to buyers. Today, with property prices increasing, investors are choosing to put their money into housing where growth is outperforming many of the more traditional asset classes stymied by historic low interest rates. In 2006 and before the downturn, mortgage approvals were 14.5% lower than the number of properties sold. By 2008 – the early years of the credit crunch, when both mortgage and sales levels fell – approvals were 42% lower than transactions. In 2012-13 as the mortgage markets, aided by government intervention, began to rally, so the gap narrowed. However, at 31.6% this remains significantly lower than at the height of the market. And where in London are cash buyers buying' It’s the postcodes of prime central London. Kensington & Chelsea, where average property values at £1.9m are among the highest in the country, is also home to the some of the highest levels of cash purchasers. According to the Land Registry, in the last quarter of 2013 52% of sales in the borough were made with cash. In neighboring Westminster the figure was almost as high at 46%. Interestingly, Land Registry data also shows that it’s the more expensive properties that are attracting the buyers. In Q4 2013, 48% of mortgage free buyers bought homes priced at under £500,000, while for properties priced over £2m the figure rose to 55%.

The number of buyers purchasing a property with cash is on the up. If you wanted confirmation, you only have to look to the Council of Mortgage Lenders (CML), which calculates that last year there were some 370,000 cash sales, 25% higher than in 2009.

Over the last few years, the number of cash buyers has been on the rise. During the depths of the economic downturn, when mortgage finance was difficult to get hold of, cash was the best – if not the only option – open to buyers. Today, with property prices increasing, investors are choosing to put their money into housing where growth is outperforming many of the more traditional asset classes stymied by historic low interest rates.

In 2006 and before the downturn, mortgage approvals were 14.5% lower than the number of properties sold. By 2008 – the early years of the credit crunch, when both mortgage and sales levels fell – approvals were 42% lower than transactions. In 2012-13 as the mortgage markets, aided by government intervention, began to rally, so the gap narrowed. However, at 31.6% this remains significantly lower than at the height of the market.

And where in London are cash buyers buying' It’s the postcodes of prime central London. Kensington & Chelsea, where average property values at £1.9m are among the highest in the country, is also home to the some of the highest levels of cash purchasers. According to the Land Registry, in the last quarter of 2013 52% of sales in the borough were made with cash. In neighboring Westminster the figure was almost as high at 46%.

Interestingly, Land Registry data also shows that it’s the more expensive properties that are attracting the buyers. In Q4 2013, 48% of mortgage free buyers bought homes priced at under £500,000, while for properties priced over £2m the figure rose to 55%.

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